SoundExchange, the U.S. government-appointed organization assigned to collect royalties for the use of music in internet streaming, has sued Sirius XM. The charge is misrepresentation and underpayment of royalties in Sirius’ internet streaming service. Sirius vigorously denies any wrongdoing in its accounting.
The case hinges on the difference between two Sirius services: Paid subscription to its satellite service, and internet streaming . The U.S. Copyright Royalty Board (the U.S. government panel which sets digital music royalty rates) established different payment obligations for those two types of music distribution.
“Sirius XM has exploited the creative efforts of recording artists without paying legally mandated compensation,” the lawsuit complaint reads. “Sirius XM has received ample and repeated opportunity to pay what it owes, but it has steadfastly refused.”
There’s a nuance to the charge. SoundExchange asserts that Sirius XM has organized its service offerings in a way that confuses its royalty obligations. Specifically, SoundExchange complains that Sirius no longer separates the webcasting service from the satellite service (SDARS):
“Sirius XM sells its SDARS only as part of a product bundle that also includes its webcasting service. Sirius XM is gaming the system: to grossly underpay the royalties it owes, Sirius XM has unreasonably characterized revenue from its bundled product as ‘webcasting revenue’ that in actuality is ‘SDARS revenue.'”
SoundExchange calls this arrangement “beyond the pale.”
At stake: $150-million SoundExchange is asking for. If that number seems familiar, and the entire case seems to contain an echo of the past, it is because the two companies have done this dance before: SoundExchange brought a royalty complaint to Sirius XM in 2013, and that case was settled in 2018 for the same $150M at stake in the current argument.
